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Wednesday, December 26, 2012

The REAL danger in Instagram's new Terms of Use: forced arbitration

Perhaps you’ve read about the controversy over new “Terms of Use” from the photo-sharing service Instagram, which now is owned by Facebook. Under the terms, if you use Instagram it is free to sell your photos, your likeness and pretty much anything else it knows about you to advertisers – without any further consent on your part, and without compensating you. And if, by some chance, you’re under 18, Instagram assumes that when you click “accept,” at least one parent has read over the terms and agreed to them on your behalf.

The ensuing furor prompted Instagram to issue a statement saying, in effect, well, yes, that’s what we said, but it’s not what we meant. The company then withdrew that particular language.

EXCEPT IF YOU OPT-OUT AND EXCEPT FOR CERTAIN TYPES OF DISPUTES DESCRIBED IN THE ARBITRATION SECTION BELOW, YOU AGREE THAT DISPUTES BETWEEN YOU AND INSTAGRAM WILL BE RESOLVED BY BINDING, INDIVIDUAL ARBITRATION AND YOU WAIVE YOUR RIGHT TO PARTICIPATE IN A CLASS ACTION LAWSUIT OR CLASS-WIDE ARBITRATION. [Caps and boldface in original].

Once the new terms take effect, existing users will have only 30 days to opt out. New users will have only 30 days after they join. And if you want to opt out, you’ll have to have to do it by snail mail. The only other choice: Cancel your Instagram account. But, according to lawyers who are suing Instagram, if you do that, you lose all rights to photos you've already uploaded.

“A FREE PASS TO BREAK THE LAW”

If these terms take effect as planned on Jan. 16, Instagram will be the latest in a long line of companies to block your fundamental right to justice by forcing you into a system where the deck is stacked against you at every turn. And if Instagram can get away with it now, will Instagram’s parent company, Facebook, try it next?

As we said in our 2011 report, Arbitration Activism, the arbitration system gives corporations “a free pass to break the law.” In keeping with its never-ending deference to corporate special interests, the right-wing majority on the U.S. Supreme Court effectively rewrote federal law, issuing decision after decision helping big business make the most of that free pass.

For starters, facing off against a corporation in arbitration is like playing a baseball game in which the other team hires, fires – and pays – the umpires. So it’s no wonder a study of top arbitrators for one major arbitration firm found that they rule for big business 93.8 percent of the time. In addition:

● Filing fees often are higher in arbitration; that can discourage individuals from suing, particularly over relatively small dollar amounts.

● Rules of discovery are fashioned by the arbitration firms and, yes, by the big businesses that hire them.

● It’s almost impossible to appeal.

● Proceedings are secret; they don’t even have to produce a transcript. As we note in Arbitration Activism “corporations can prevent negative publicity, keep their wrongdoing secret, and avoid emboldening other customers and workers from bringing legal action.”

● Perhaps most serious, arbitration clauses, like the one from Instagram, prohibit class-action suits - like the one that's just been filed against Instagram over the new Terms of Use. When millions of people are cheated out of relatively small amounts per person, each can’t go through a cumbersome arbitration process to get her or his money back. The only hope for justice – and the only real deterrent to fraud – is a class-action. But the Supreme Court has upheld the prerogative of big business to deny consumers that right.

And it’s not just consumer issues. Arbitration, and with it the ban on class-actions, is spreading to employment contracts, threatening to make it nearly impossible for workers to sue over race, sex or age discrimination.

CONGRESS CAN FIX THIS

The Arbitration Fairness Act of 2011 would bar forced arbitration in most civil rights, consumer, and employment discrimination cases. The bill never got out of committee. We hope members of the new Congress will try again.

In the meantime, if you use Instagram, be sure to write out that opt-out letter and mail it to Instagram, LLC ATTN: Arbitration Opt-out 1601 Willow Rd. Menlo Park, CA 94025.